Table of Contents
How to avoid being liquidated in contract trading?
Techniques and methods of not liquidating contracts
Home web3.0 Keep contract trading robust: Effective tips and strategies to avoid contract liquidation

Keep contract trading robust: Effective tips and strategies to avoid contract liquidation

Jan 26, 2024 pm 02:15 PM
contract trading How to prevent liquidation in contracts

php editor Apple introduces to you the techniques and methods to prevent liquidation in contract trading. Contract trading is a high-risk, high-reward investment method, and liquidation is one of the situations that traders are most worried about. In order to avoid liquidation, traders need to master some key skills, such as setting stop-loss and take-profit points appropriately, reasonably controlling positions and leverage multiples, and adjusting positions and risk management strategies in a timely manner. This article will give you a detailed introduction to how to use these methods to protect your investment and reduce the risk of liquidation.

Keep contract trading robust: Effective tips and strategies to avoid contract liquidation

How to avoid being liquidated in contract trading?

Contract transactions have the possibility of liquidation. Investors should be prepared accordingly to prevent liquidation, because it is impossible to guarantee profit for every contract.

To avoid liquidation of contract trading, effective risk management strategies can be adopted, such as setting reasonable leverage, setting up stop-loss orders, and using margin level warnings, etc. Rational risk management and good trading discipline are key.

Contract trading liquidation means that due to market fluctuations and other reasons, investors' losses exceed the available margin of their accounts, and they are forced to close or liquidate their positions. This usually occurs in leveraged trading, where even small market movements can have a large impact on investors' funds.

Techniques and methods of not liquidating contracts

Contract trading will not liquidate. There are three ways to avoid it: adding margin, closing positions and setting stop losses.

1. Additional deposit deposit

Additional margin deposit can temporarily increase the net worth and avoid forced liquidation. However, this method is only a temporary measure and is not recommended for frequent use.

Investors should note that improper deposit timing may lead to greater losses. Novice investors should not add margin at will, and it is recommended to use the stop loss method.

2. Close the positions you hold

If you hold multiple positions, you can close some positions. Temporarily maintaining a higher net worth (number of equity) can avoid forced liquidation. Warehouse operations. However, just like the meaning of additional margin deposits, once the trend occurs, the position will eventually be forced to be liquidated.

In addition, if you hold a position with a floating loss, the level of net worth (number of equity) will drop, and you will not have enough funds to trade when the opportunity comes.

When you hold a position with floating losses for a long time, the relative risk will also increase, and you should consider stopping the loss immediately.

3. Set a stop loss in advance

It is recommended to stop the loss immediately when the allowable loss amount is exceeded. Although stop loss is an act of determining loss, its function can protect important funds. However, we often see cases of failure to effectively implement stop loss and exit the market.

The above is the detailed content of Keep contract trading robust: Effective tips and strategies to avoid contract liquidation. For more information, please follow other related articles on the PHP Chinese website!

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